Peninsula’s economy continues to rebound, more jobs added

Nearly two years after the Great Recession, the peninsula’s economy is clawing its way back to recovery.

Job growth — one of the broadest measures of the region’s health — is moving slowly in the right direction.

Unemployment has declined to 8.3 percent in San Mateo County and 10.3 percent in Santa Clara County, down from year-ago tallies of 9.2 percent and 11.6 percent, respectively.

“Things are getting better,” said Rosanne Foust, the CEO of the San Mateo County Economic Development Association. “There is a sense that employers are slightly more relaxed and looking to hire” and “there’s not the concern of maybe six months ago that this could be a double-dip (recession).”

Indeed, companies along the peninsula have indicated they will continue to hire. One-third of businesses in San Mateo County and almost 40 percent of Santa Clara County businesses planned to increase their workforces during the first half of 2011, according to a survey of large and small companies by the Bay Area Council, a group that advocates for business-friendly policies.

Strong job market

“We’re seeing optimism and confidence in all private industry sectors,” said Jim Wunderman, CEO of the Bay Area Council. The peninsula is one of the best places to look for a job in the next few months, he said, especially in industries like trade, professional and business services and IT.

ODesk Corp. is an example of a growing firm. The venture-funded company, which links contract workers and employers online, said it plans to have almost 80 employees by the end of the year, up from about 45 now. CEO Gary Swart said the Redwood City company has had to boost starting salaries and add other perks like free meals to stay competitive with other companies in the region.

“Hiring talent in the valley is very competitive now,” said Swart. “We have to compete with lots of successful startups.”

Other metrics are encouraging as well. Income is on the rebound. Per capita yearly income rose to an average of about $63,000 in San Mateo and Santa Clara counties in 2010, up from about $61,000 the year before, according to Joint Venture: Silicon Valley Network, a business policy group.

While that is down from a peak of more than $70,000 in 2000, it is an encouraging sign that demand for workers is on the upswing.

Resilient peninsula

“I’m guessing that in a couple of quarters from now people will be talking about Silicon Valley’s resilience. We’re always the comeback kid,” said Russell Hancock, CEO of Joint Venture.

Accordingly, commercial real estate is becoming a hotter commodity. In San Mateo County in the first quarter, vacancy rates decreased to 15.3 percent from 17.6 percent at the close of 2010. Companies like Facebook Inc. and government agencies like the County of San Mateo made recent big deals, taking more than 1 million square feet and 208,000 square feet, respectively.

Much of what is behind the peninsula’s progress is a strengthening technology sector. Technology sales are on the upswing, said Christopher Thornberg, an economist with Beacon Economics. Technology sales overseas have ramped up sharply, he said, logging a 20 percent gain year-over-year, citing data from Wiser Trade, which tracks exports.

While the area’s economy is improving, there are still a number of factors weighing down the resurgence.

Consider home prices. In both San Mateo and Santa Clara counties the median sale price for single-family homes is down 10.8 percent and 2.5 percent, respectively, suggesting that the housing market has yet to snap back.

Public sector woes

Some of the most worrying signs for the region stem from government, said Hancock. Local and state government are facing a major fiscal crisis that likely will last well beyond this year. This is a problem because that means government can’t contribute to the economy as an employer. It also means the infrastructure that businesses rely on — roads, schools, water and the like — are in danger of declining in quality.

Only a financial rebound in the public sector — coupled with structural changes to lessen spikes in tax revenue — will improve government’s plight, he said.